By Jennifer Thompson
The headlines about an increase of just under 75,000 people in work in Australia last month were welcomed by government leaders. But the news came just a couple of weeks too late for former employment minister, Amanda Vanstone, who lost her job in part due to a couple of episodes of uncharacteristic honesty about the black prospects for Australia's unemployed and the government's culpability.
Breathing a sigh of relief, PM John Howard proclaimed that the sun was shining for battlers "more brightly today than it was a month ago".
The Australian Bureau of Statistics Labour Force series indicated that employment had increased by 54,700 people in full-time jobs and 20,000 people in part-time work. Male employment increased by 32,600 and female employment by 42,200, to raise the number of Australians in work (meaning at least one hour per week) to 8.4506 million (seasonally adjusted).
Unemployment fell by 7200 to 8.6%, and the labour market participation rate (measuring those either actively looking for work or working) rose to 63.3% of the civilian population aged 15 or over.
In seasonally adjusted terms, the male unemployment rate rose 0.1% to 9.0% and the female rate fell by 0.5% to 8.1%, with overall unemployment falling in all states except South Australia and Tasmania.
On September 22 the Australian newspaper's economics correspondent, Ian Henderson, pointed out the "danger" of a higher demand for labour: it may encourage some who have given up looking for work to re-enter the labour force, causing the official unemployment figures to rise again.
His analysis of the ABS trend figures puts the number of people who have withdrawn from the labour force since the start of 1997 at 100,000, suggesting that the unemployment figures would have been around 895,000 or 9.6%, if they'd stayed in.
Tackling public concern about unemployment and job insecurity has become Howard's number one task, and his September 10 announcement of a freeze on tariff reductions in the textiles, clothing and footwear industries, following an earlier announcement of a pause on tariff reductions for the car industry, has been about just that.
Announcing the TCF freeze, Howard carefully noted that it was aimed at combating Australian workers' feelings of insecurity about their jobs because of widespread corporate and public sector retrenchments.
He didn't claim that it would actually save jobs. The estimated $1.5 billion in extra investment in the industry that may arise from this corporate handout may actually reduce jobs because of increased mechanisation.
Jobs in the TCF industries dropped from 129,000 to 111,000 in the 10 years to May 1988, during which time governments were using import quotas to double the protection afforded to the industry.
Job insecurity and unemployment are emerging as two of the key reasons the economy has stalled, despite five interest rate cuts in 14 months.
In early September, Housing Industry Association chief executive Ron Silberberg noted that the outlook for the home building industry was bleak: "Interest rates are at record lows, housing affordability is near record highs, and yet many Australians seem too uncertain about their future employment to commit to home ownership."
His views reflect concern among capitalists about lack of consumer spending.
Hence Vanstone's dismissal. Her two moments of peculiar honesty about unemployment were dubbed "blunders" by media pundits.
One involved an admission of the government's direct contribution to high unemployment through spending cuts. Thousands of jobs were lost as a result of this year's federal budget, which cut 16,500 public service jobs, on top of last year's 11,200 jobs cut.
From around 125,000 commonwealth public servants, the government aims to cut 75,000.
Beyond the public service, this year's public housing funding cuts will cause 200 jobs to be lost in the NSW housing industry. Further jobs will be lost in the government's business enterprises, including Telstra, which plans to slash 25,000 jobs over three years.
Vanstone's second, and possibly more serious, candour crisis came when she told a private dinner on September 13, after the release of August's job figures showing a 34,000 decline, that Australia needed a freer labour market and less job security to reduce unemployment. She might have added that a massive cut to income support for the unemployed could help as well.
There's little doubt that she was describing the government's longer-term strategy on unemployment — the so-called low-wage, high-insecurity, high-"flexibility" and low-welfare US model — but it shattered Howard's delicate balancing act between talking up the economy and increasing private profits at the expense of working-class living standards.
The government's significant interest in the US model, which undoubtedly reduces real and official unemployment rates but drastically slugs the income levels and working conditions of workers and their families, has been revealed by recent public and private discussion of the pros and cons of the model, including about the steps for its implementation.
The Financial Review canvassed the debate in its September 13-14 issue: "Arguing from first principles, Australian economic rationalists suggest if minimum wages are lowered, the quantity of labour demanded by employers will grow. Curb welfare at the same time, they say, and incentives for the jobless to find work will be increased."
Howard signalled his view some months ago. When asked on radio 2GB on July 7 about the United States' "low" unemployment, he said: "We have as a nation over the years adopted as part of our ethos a higher minimum wage than many other countries. Now, one of the consequences is that you do have a higher level of unemployment ... there is no doubt in the world that the Americans do have much lower minimum wages."
There are some real difficulties with this plan, however, including the union movement's attempts (albeit weak) to maintain some sort of wage growth for low-paid workers. The latest attempt is a new national wage claim seeking increases in minimum award pay rates totalling $58.60 per week over the next two years.